FSDC pitches for a special drive to settle unclaimed deposits in banks

High-powered Financial Stability and Development Council (FSDC) headed by Finance Minister Nirmala Sitharaman on Monday asked the regulators to initiate a special drive to settle unclaimed deposits in banks and financial institutions.

Briefing reporters about the discussions in the meeting, Economic Affairs Secretary Ajay Seth it was deliberated that regulators should conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments, such as banking deposits, shares and dividends, mutual funds, insurance, etc.

"It was also noted that, as the Union Budget has announced that unclaimed deposits and shares and dividends, which are lying in the pool, a drive should be taken by the concerned regulator, especially where the nominee details are available with them though the nominees may not be aware of that.

In a time-bound manner, that activity should be taken but where the nominee details are not there, the process has to be put in place, he said.

About Rs 35,000 crore unclaimed deposits as of February 2023 were transferred to the Reserve Bank by public sector banks (PSBs) in respect of deposits, which have not been operated for 10 years or more.

These unclaimed deposits belong to 10.24 crore accounts transferred to the RBI as of the end of February 2023.

Last month, the Reserve Bank Governor said that a centralised portal would be ready in three to four months wherein depositors and beneficiaries can access details of unclaimed deposits across various banks.

The 27th meeting of the FSDC was attended by all financial sector regulators, including RBI Governor Shaktikanta Das. This was the first meeting of the FSDC after the passage of the Rs 45 lakh crore Budget for 2023-24 with greater emphasis on capital expenditure with an outlay of Rs 10,00,961 crore.

The council discussed a number of issues starting with the issue of financial stability, noting that there are daunting challenges coming from the global economy.

"It was noted that maintaining financial stability, being on our toes, and maintaining financial stability is a shared responsibility and all the members will be working towards that," Seth said.

Regulators should adopt a focused approach to reduce the compliance burden further and ensure a streamlined and efficient regulatory environment, he said, adding the progress achieved in this regard will be reviewed by the Union Finance Minister with each regulator in June 2023.

The regulators need to be proactive and ensure cybersecurity preparedness of the information technology systems to reduce the risk of cyberattacks, protect sensitive, financial data and maintain overall system integrity, thus safeguarding the stability and resilience of the Indian financial ecosystem, he said.

During the meeting, it was discussed that the policy and legislative reform measures required to further develop the financial sector may be formulated and implemented expeditiously to not only increase the financial access of the people but also increase their overall economic well-being.

Further, the secretary said, the council also decided that wherever legislative changes are required, as announced in the budget, that should be expedited so that the government can take a final view on those matters and the plan is that those lists of changes to the extent of necessary approvals within the government with a competent authority can be put to Parliament for consideration.

Beyond that the council also discussed issues relating to early warning indicators for the economy, he added.

The council also deliberated reducing the compliance burden on the regulated entities in the financial sector by improving regulatory quality, debt levels of corporates and households in India, simplification and streamlining of KYC framework to meet the needs of Digital India, he said.

Besides, the seamless experience for retail investors in government securities, Bimakrit Bharat - Unique Value Proposition to take insurance to the last mile and support required in terms of resolving inter-regulatory issues for GIFT IFSC to play a strategic role in Atmanirbhar Bharat was also discussed.

The council took note of the activities undertaken by the FSDC Sub-Committee chaired by the RBI Governor Shaktikanta Das and the action taken by members on the past decisions of the FSDC.

Besides RBI governor, Securities and Exchange Board of India chairperson Madhabi Puri Buch, Insurance Regulatory and Development Authority of India (Irdai) chairman Debasish Panda, Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mital and Pension Fund Regulatory and Development Authority's newly appointed chairman Deepak Mohanty participated in the meeting.

According to sources, the FSDC meeting was also attended by Minister of State for Finance Pankaj Chaudhary and Bhagwat Kishanrao Karad, Finance Secretary T V Somanathan, Economic Affairs Secretary Ajay Seth, Revenue Secretary Sanjay Malhotra, Financial Services Secretary Vivek Joshi and other top officials of the finance ministry.